Can Big Tobacco Grow Again?

WSJ columnist sees opportunity, caution in hybrid cigarette

NEW YORK --Wall Street Journal columnist Tom Gara may have gotten a peek at the future on tobacco this past week. Last Friday afternoon, in a hotel lounge in Midtown Manhattan, Gara reported in a recent column, he saw “what one of the world’s biggest tobacco companies says could be central to its growth in the coming years.”

It wasn’t a cigarette as we know it, and it wasn’t an electronic cigarette. Instead, it was a hybrid of the two—a black, cigarette-shaped tube containing a battery and electronics. Into one end of the tube, users plug what looks like a miniature cigarette, a couple of inches long, paper filled with real tobacco.

The user “lights” the cigarette by pressing a button, activating a mechanism that heats the tobacco to a temperature high enough to turn its nicotine into vapor, but not high enough to produce smoke.

The user then puffs away, on what Marlboro-maker Philip Morris International Inc. refers to as a “reduced risk product”—careful language to describe the devices that it hopes regulators will approve for sale in Europe, and eventually in the U.S.

If all goes to plan, they will be available in some test markets before the end of 2014, with a wider rollout next year.

“Reduced” risk is the key word here, said Gara, WSJ’s Corporate Intelligence blogger. There is no such thing as a safe way to inhale nicotine, the company acknowledges. And health campaigners, who have spent decades battling the tobacco industry, worry that new, less risky products like e-cigarettes will act as a Trojan horse, getting a new generation addicted to nicotine.

Regardless, the company, which sells Marlboro and other brands outside of the U.S., is making a big bet on this new breed of products. In January, it said it would invest up to $688 million in its first manufacturing facility to produce them, capable of making up to 30 billion units annually by 2016.